Tuesday, 10 July 2018

GNPC has not invoked 10% priority on Hess Block sales

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July 10, 2018

Adnan Adams Mohammed

Ghana National Petroleum Corporation (GNPC) as at press time
last week, has not invoked the 10 percent privilege clause as the first party
to be considered for share in any oil block which is to be resold on the Hess
Oil Block that has been sold to Aker Energy.

According to our reliable source in the industry, Aker seems
to think that GNPC which is representing the Government of Ghana has turned it
down.

However, as at now there has not been any audit of financial
cost of the block to help arrive at the actual current price at which GNPC can
invoke it's 10% first option to buy from the block, which will likely reduce
the Aker’s current 50% holding in the Hess Block.

Consequently, given that Aker purchased 50% (actually 40%, if GNPC invokes it's
10%) for US$100 million – a price far lower than the amount Lukoil paid apparently,
if GNPC did turn the 10% first option down
as Aker and Hess believe, it will be the greatest loss since Russia sold Alaska
for 1 US cent per acre.

Alexander
Mould, former CEO of Ghana National Petroleum Corporation (GNPC) who has been
instrumental in Ghana’s oil and gas industry as the immediate past leader of
the state-owned operator, has raised several questions against the said sale or
transfer of interest from Hess to Aker Energy.

He is worried over the silence of government of Ghana since the start of the
news going round. He questions, “Has this been approved by Government of Ghana
(GoG)? Does it need Parliament’s ratification?
Who will be the Operator?”

He again quizzed, “With the sale of Hess’ 50% interest in the Block (which will
reduce to 40%, if GNPC invokes it’s 10% Option) at the alleged US$100 million,
will GoG/GNPC renegotiate the purchase of its 10% for US$20-25 million instead
of the US$47-50 million that the Option was priced at?

GNPCs has the privilege to decide to invoke their Option for 10% of the Block
which was part of the Lukoil farm-in conditions. But, it is unclear if GNPC has
been given the chance to make their decision on the deal.

He asked, “Has GoG agreed with GNPCs decision to not invoke their option for
10% of the Block which was part of the Lukoil farm-in conditions?”

Again, the oil and gas expert, is worried as to if the government will insist
on Aker abiding by the local content law (that is, allowing minimum of 5% of
their interest given to a Local Partner), just like Lukoil were made to.

The transparency aspect of the deal is as crucial as the capability of Aker to
meet the needed financial and technical capacity required of oil block
operators. “Will this process be transparent with a clearly defined selection
criteria - operational/technical ability as well as financial ability?, Mr
Mould asked.

Information going round since February this year is that, the Norwegian
billionaire Kjell Inge Røkke's Aker Energy has acquired Hess's Ghana
operations, which come with access to a 50 percent stake in the Deepwater
Tano/Cape Three Points project which is now on the brink of entering the
development stage.

Aker Energy has served notice of presenting a plan soon towards the development
of the block this year, with production expected to start in 2021.

"Ghana is still in the early days of developing its oil and gas resources,
so for us, it means we can quickly build up there at a very exciting
price," Aker CEO Oeyvind Eriksen told Reuters on the sidelines of an
earnings presentation.